Online Casino News and Information

It was announced today that two big powers in the European online gambling market will merge into one. In a reverse takeover, PartyGaming plans on acquiring Bwin Interactive in a deal valued at $1.76 billion dollars. This would create the world’s biggest traded online gambling company.

According to Bloomberg,

“The merged company, which had reported sales of 682 million euros, will be 51.6 percent owned by Vienna-based Bwin, with PartyGaming of Gibraltar holding the rest, the companies said in a statement today. The new company would be listed in London and have leading positions in online poker, sports betting, casino and games such as bingo, they said.”

So what should anyone make of this merger? Accordeing to Gianmarco Bonacina, an analyst with Equita SIM SpA in Milan this moves puts the combined company in a better financial position versus PokerStars and FullTilt as well as positioning them to take advantage of emerging markets.

Gianmarco told Bloomberg,

“From an industrial point of view this is both an offensive and a defensive move. In Europe, Bwin and PartyGaming are losing market share in poker versus Pokerstars and Fulltilt, so the combination will protect them. In the U.S., the move is offensive. They want to attack that market and are in a better position if they combine.”

Since as of yesterday, the move to regulate online gambling in the United States has been put in motion, PartyGaming Chief Executive Officer Jim Ryan told reporters, “We will immediately be a leader in these markets as they open up.”  Also considering online gambling rule revisions are Canada, Denmark, France, Italy, Ireland and Spain.

The remaining hurdle of this merger would be to get shareholders to vote in favor of it which the board members of each company will unanimous support and ask each shareholder to vote in favor of it.

Step one passed with flying colors.  House Committee on Financial Services Chairman Barney Frank’s bill H.R. 2267 the Internet Gambling Regulation and Consumer Protection and Enforcement Act took a step today in trying to regulate online gambling in the United States.

This bill would regulate internet gambling in the U.S. as well as require operators who have gotten a license to have safeguards in place to curb underage gambling and to help prevent problem gambling. It passed a mark up vote with bi-partisan approval today 41-22.

In a press release by Safe and Secure Internet Gambling Initiative spokesperson, Michael Waxman expressed his pleasure over the vote,

“The Committee’s bi-partisan vote to approve Chairman Frank’s legislation is nothing short of historic. With Congress bitterly divided and only a handful of bi-partisan bills coming out of the Financial Services Committee, we’re pleased Committee members from both sides of the aisle were able to come together to advance this important legislation.”

Chairman Frank reiterated a view expressed by many who have called the current law, the UIGEA, prohibition on online gambling. He argued that his bill goes beyond the monetary help it could provide the U.S. and speaks directly to the cause of guaranteeing freedom.

Representative Spencer Bachus (R – AL) stayed solidly on the opposed side arguing that the decision regarding internet gambling should be decided by each individual state rather than the U.S. government. He further said,

“After all the flak last year about shutting down the casinos on Wall Street, why would we take steps today to open up casinos in every home, every bedroom, every dormitory room, every iPod, every iPad, every computer in America?”

Rep. John Campbell (R-CA) sided with Chairman Frank saying, “This bill, if it imposes anything, imposes freedom,” Telling Bachus that the citizens in this country would have a greater choice if this bill would become law not a lesser one.

Although freedom of choice is an important issue; the revenue that could possibly be generated has also been studied. The Joint Committee on Taxation analysis showed that regulated online gambling could produce as much as $42 billion in federal government revenue over its first 10 years.  In another study by H2 Gambling Capital it showed that the online gambling industry could produce as many as 32,000 jobs over its first five years.

Before today’s vote, H.R. 2267 has gotten support from 69 co-sponsors from both parties as well as support from the U.S. Chamber of Commerce, the Financial Services Roundtable and the National Association of Federal Credit Unions.  This moves the bill closer to being considered by the whole House of Representatives.

Just like it was alluded to last week in the House Financial Services hearing Barney Frank’s H.R. 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act is moving quickly through the beginning stages and already has a mark-up set for Tuesday, July 27th.

The hearing had its fair share of supporters and distracters with heated discussion’s coming from both sides. Barney Frank, who is Chairman of the House Financial Services Committee certainly would not call for a mark up if he didn’t already think he had the votes to get it passed. The HR 2267 mark up is one of 6 that are on the agenda for Tuesday however making it hard to pinpoint when the vote will occur.

They’re still strong opinions on both sides of this issue. The main argument for some kind of regulation of online gambling is revenue and can be summed up by Michael Waxman, spokesperson for the Safe and Secure Internet Gambling Initiative who commented in a press release Friday that,

“The passage of this legislation would be a win-win as it will protect consumers, create an estimated 32,000 new jobs over five years and provide federal and state governments with as much as $72 billion in new revenues over ten years.”

The counter argument to that seems to be protecting the children, as former federal prosecutor Michael Fagan summed up,

“Any parent who’s puzzled or despaired over their child’s trancelike playing of video games during the past 20 years can readily see why Internet gambling operators are drooling over the chance to legally expand their market base into the United States.”

There are those however that break it down even further and suggest that it is not fair for the U.S. government to take away a person’s right to choose if they want to gamble online or not. It is a matter of taking away our right to freedom of choice.

Former Senator Alfonse D’Amato wrote about this view in a politico.com opinion contributor article when he said,

“The freedom to play poker is not one of the rights enumerated in the Bill of Rights. But when the Founding Fathers conceived of a new nation, they never dreamed that someday Congress would dream up a law to ban that particular freedom — especially when such a ban was so clearly against the wishes of the American people.

What the Founders did envision was a government that would necessarily listen to the wishes and demands of those who sent them to Washington in the first place.”

No matter what side you are aligned with, it looks like online gambling is coming to the forefront on Congress real soon, probably this year. With a little luck, freedom of choice will win the day.

After the crash of the first North American online gambling site, PlayNow.com and the final admission of the B.C. Lottery Corporation that it had a privacy breach where over 130 players had their private information seen by other players, the government today said they have no idea when the site will reopen for business.

Rich Coleman, the Housing and Social Development Minister did not give a timeline has to when the problem would be fixed and players could return to play. When he was questioned about how much the delay would cost, his has a rather non-chalet answer,

“Oh, not a lot because it wasn’t expected to be a huge revenue generator in the first couple days anyway. And, frankly, it doesn’t matter what the cost is. We had an issue with the technical side of it and it needs to be fixed.”

Originally the B.C. lottery commission re-launched the PlayNow.com site on Jusy 15th after spending $7.3 million for a redesign and to add new games. Just hours after the much anticipated debut, the site crashed. The lottery commission blamed the onslaught of traffic as the reason for the failure but later admitted they had a technical glitch that lead to private information on players being able to be seen by other player.

This time, they have added two more servers and according to Mr. Coleman, a third party will review the site and verify it is secure and ready to go.

Not everyone is satisfied with what is happening however. Shane Simpson, NDP opposition critic thinks that because the delay is taking so long, that it is an indication of bigger problems than being reported.

“What we do know now is the problems were much more significant at the corporation than let on at the beginning,” he said. “Being far too hasty in getting it [playnow.com] up when they did instead of taking their time to make sure that it was operating properly, and as a consequence it is going to cost us more money than if we would have done it right in the first place.”

So far, there is still confidence on the lottery corporation as Premier Gordon Campbell said in a recent press conference,

“I think we always have to be vigilant. We have to learn from all the mistakes that are made and when mistakes are made, I think that’s exactly what they’ve tried to do.”

For now, B.C. gamblers must wait.

In three months the Unlawful Internet Gambling Enforcement Act (UIGEA) will turn 4 years old.  The regulations put in place to govern how to enforce this law just came into effect in June and now, finally, Barney Frank and his bill  HR 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act is moving forward to try and change it.

Wednesday, a hearing was held by the House Financial Services Committee that allowed financial institutions (who currently carry the burden of enforcing most of the UIGEA policy), representatives of law enforcement as well as gamblers themselves to all testify in an attempt to change the internet gambling laws in the U.S. Most viewed the hearing as a step, albeit a small one towards changing the US views on online gambling but the hearing also showed there is still strong opposition as there where at times tense moments and a lot of heated debates.

Speaking for the Credit Union National Association, Ed Williams, President and Chief Executive Officer for the Discovery Federal Credit Union talked about being for some sort of online gambling regulation stating the current law is to ambiguous to fully be affective,

“In short, the law (UIGEA) makes credit unions and other financial institutions liable if transactions with illegal Internet gambling providers are approved,” said Williams, “but it does not provide us with a definition of ‘unlawful Internet gambling,’ much less a list of illegal Internet gambling providers.”

One of the heated exchanges during the meeting came from Rep. Joe Baca (D-CA) who is against the regulation being set forth by Barney Frank when he spoke about the Indian Nations in America. He claimed that Native Americans would, “de facto be giving up their sovereignty if they agreed to a 2% tax to the federal government on online gambling profits.”

This raised the eyebrows of Lynn Malerba of the Mohegan Tribe of Connecticut who will soon become the chief of the tribe .  Malerba strongly disagreed with Rep. Baca and told the congressman that she would welcome a 2% tax on such things as the tribes slot revenue because currently it is around 25%.

The tensest part of the day was during the Poker Players Alliance representative Annie Duke and the panel, particularly, when Rep.  Spencer Bacchus (R-AL) brought up the scandal that involved UltimateBet and noted the affiliation of Duke and the site.

Duke turned the tables on the Congressman however saying that the scandal was precisely the reason the federal government should be involved in online gambling,

“The site self-regulated and refunded all the money to its customers. I would prefer to have something like HR 2267 so that the government could oversee that regulation. I think that the customers of that site were lucky that they were playing under a site with new management that behaved in an honest way and refunded them,” said Duke. “The one individual who perpetrated the crime and breached the software has not been prosecuted because unfortunately there is no jurisdiction to do so.”

Most claim that despite some of these exchanges that the meeting was positive and though there may be some changes to the original writing of the bill, Barney Frank is expected to bring the bill back to the committee for a mark-up and vote in the next couple of weeks. If he garners enough votes in committee, this legislation can then be slated to go to the full House of Representatives for debate.

Though we thought it was the high demand of players that were trying to access the B.C. Lottery Corporation’s new gambling site Playnow.com that had it shut down Thursday morning shortly after a much heralded launch. We find out now it was a privacy breach that was the cause of the shut down.

It was revealed that the breach was pretty significant as some players were able to see personal information of other players such as names, contact information and even credit card and bank information. Some even reported the ability to gamble with other player’s money.

The Lottery Corporation however blamed the shut down on high demand and made no mention of any security breach at all publically till four days later. The BCLC CEO Michael Graydon knew about the security breach Friday, the day after the site was shut down. It was revealed that 134 gamblers had their privacy breached and were contacted by BCLC officials. Graydon said he didn’t feel going public at the time with this information was necessary.

He told CBC Radio on Wednesday,

“As we continued to investigate after the site was shut down we found that the data crossovers had happened in a number of locations. The first thing that we did was contact the privacy commissioner and let them know that there may have been a privacy problem.

At that point, our public became our players, and not the general public. The site was closed down. There was no ability for further transaction and we felt it important that we communicated directly with our players with the level of detail they expect from us in regards to what had happened.”

You can read here that during the launch on Thursday that the site was being heralded as a safe and secure option for B.C. residents to gamble online. Currently there has been no word on when the PlayNow.com site will be re-opened.

Looks like we finally have legal online casino gambling in North America, you just have to go to the northern part of North America to get it. British Columbia is looking at getting its piece of the close to $100 million that is being gambled on off shore websites by its residents. It is now the first official North American authority to offer legal online casino gambling.

Thursday, B.C. residents can go to PlayNow.com and play games like blackjack, craps and roulette as well as bingo, sports betting and lottery. For now there is no online poker but it is expected to make its debut later this year. The PlayNow website is operated by the B.C. Lottery Corp.

Rich Coleman, the housing and social development minister told CTV News that:

“We could stay on the sidelines, pretend the situation doesn’t exist and watch revenues slip, but more importantly, ignore what should be better for our citizens in our province or we could provide (an) online gaming option like others that is accountable to British Columbians, that is secure, that protects their information and employs the highest levels of integrity and security of any system in the world.”

Those in favor seem to echo what is being said in most U.S. states that are facing financial issues and are looking for ways to get into the online gambling industry as well, those that gamble will be on a safe secure site and the revenue generates will stay in British Columbia to benefit the residents there.

Of course there are also detractors. Some, like Shane Simpson, the New Democrat housing and social development critic, who says he doesn’t oppose the actual online gambling part or the revenue generated from it but fears that there aren’t enough programs available to help those that may need it. He points out that during the last budget while raising the weekly limit that can be played at PlayNow.com substantially; the province also cut the budget for problem gambling programs.

Others claim that online gambling targets the youth that are susceptible to becoming addicted as well as the Vancouver chapter of Gamblers Anonymous calling online gambling a, “very addictive and insidious thing.”

The PlayNow site claims 140,000 registered and you have to be 19 or older to sign up. Research shows that $160 million is wagered online from Canada each year and according to studies done by PlayNow, 11% of B.C. residents have wagered real money online.

As of this writing the PlayNow.com site is down saying, “We are experiencing technical difficulties and will have the matter corrected shortly.” Seems like demand is not going to be a problem.

Well folks, it’s a done deal. After several delays and a final campaign to reverse it, UIGEA (the Unlawful Internet Gambling Enforcement Act) went into full effect on June 1^st, 2010. What, if any, are the effects it’s had on the Internet gambling scene in the United States?

John Pappas, executive director for the Poker Players Alliance (PPA), stated: “I think we’ve seen very little impact on the ability of Americans to play poker on the Internet…For many Internet poker sites and players, the ill effects of the UIGEA were felt several months ago if not several years. Most sites migrated to other responsible payment systems and the players migrated to that as well”.

Many companies pulled out of the American market before UIGEA went into effect to avoid any possible legal problems. And several prosecutions of company executives, such as PartyGaming and Sportingbet, had already taken place before UIGEA went into effect.

Also, some prepaid and reloadable gift cards are now being rejected, where before they weren’t. Some credit cards are also now declined for the first times.

Glen Farmer, of USAPlayers.com, states that many online sites have raised their minimum deposit requirements. He says that this tactic affects the low stakes players, those who play for mostly entertainment, and not for the sake of gambling.

Online casino and internet poker sites are reporting very few problems, and none since June 10^th.

There are some rather unexpected problems arising from the enactment of UIGEA.
While online horse racing betting was exempted from the effects of UIGEA, some banks and payment processing centers, are rejecting some of the horse race betting.

So while the major problems feared by many have not materialized, there are problems surfacing with UIGEA. Most of them are caused by the ambiguity of the way the law is written, while others point to the problems of having banks and other financial firms forced to enforce the law.

State Senator Roderick Wright, Chairman of the Governmental Organization Committee, delayed a vote by his committee on his bill that will create a license and regulatory system for online gambling within the state of California. Instead of a vote on the bill, he decided to tell the committee about the progress of the bill and why California needs a bill to license and regulate online gambling. He stated that the bill needs more work.

The work is required because people who were thought to be supporters of the bill, among which are the Morongo Band of Mission Indians and some of the California card rooms, which had been pushing for a bill to regulate online gambling, have come out against it in its current form. They want the new online licenses to go to businesses that already offer poker in California, while the current bill offers an open competition for the three internet gambling licenses.

State Sen. Leland Yee stated: “It’s clear to me that I don’t think we’re in the place where we know all the possible insights and permutations….A model that I would be supportive of would entail players and entities that we have dealt with in the past. Given the fact that we’re moving in this new arena, it requires some background and understanding who they are and what they’re about and their honesty. We can’t afford missteps.”

Sen. Wright stated: “If it fits for a group, it may or may not fit for another….The world isn’t standing still while we figure out what to do….The longer we wait, the more difficult it will be to get that business back.”.

The French Gaming regulator ARJEL this week has awarded two more licenses to operate online gambling sites in France. PartyGaming was given a license to operate their online poker and sports betting websites to French residents.

PartyGaming will offer sports betting right away and when the issue with Malta is remedied, they will offer online poker. Earlier PartyGaming announced three deals that will allow them to benefit from a huge pool of players. Those deals are with the French poker network PMU, AB Groupe, Frances largest pari-mutuel horse racing company and Aviation Club de France, one of France’s most prestigious card rooms and private members clubs.

Also approved was the worlds largest online poker site, PokerStars. The site will operate its own French only site at pokerstars.fr. Currently French residents can play free games and sit n go’s until the online poker guidelines will go into effect.